Story of An Utterly Butterly Supply Chain
Established in 1946 as a dairy cooperative in response to the corrupt Polson Dairy in Anand, Gujarat, Amul has become a household name over the years. The cooperative was born with the vision of providing low-cost, high-quality dairy products to consumers, while eliminating middlemen and ensuring maximum remuneration to farmers. Under the expert guidance of Sardar Patel and ingenious leadership of Dr. Verghese Kurien, dairy technology saw a breakthrough with Amul as the pioneer- relentlessly serving the countrymen with ‘Amulya’(priceless) quality.
Behind the utterly butterly girl clad in a red polka-dotted dress, there is a long queue of stakeholders integrated under the Amul umbrella. In their ‘cow-to-consumer’ supply chain, the company ensures that farmers are paid at the time of delivery. Being a highly perishable food sector, Amul encounters quite a complex logistics chain including special treatment, efficient cooling mechanism, quality control and quick action. The joint effort and productive team work, encompassing farmers, processors, marketers and consumers, has made Amul the symbol of strong business, high quality at low cost.
An Amulya Universe- The Taste of India
Tech-Backed White Revolution
As the pandemic unfolded, with strict nationwide lockdown imposed across 3 weeks, Amul despite facing a massive imbalance in the supply-demand chain, was able to rise high. Technical adaptation a decade ago made it possible for the company to divert all the idle resources and bring back balance to the chain to ensure steady supply overnight!
Diving into the multi layered structure of Amul, the company boasts of an expansive supply chain with-
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3.6 million farmers
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18700 societies
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5000 milk tankers
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200 chilling stations
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750 SKUs
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62 branches
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10000 distributors
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1 million customers
Rungs of the Amul Supply Chain
The humongous chain with a multitude of stakeholders from diverse levels, was not easy to handle as it expanded. The three-tiered model, with producers at the base, village cooperatives federated under a milk union at the district and state level became increasingly complex as the company proliferated.
It was Amul’s decision to embark on technology to digitize the supply chain to increase visibility at every point that transformed the business and made it thrive through the lockdown. To remove data silos and scan through the end-to-end supply chain, Amul partnered with IBM way back in 2009.
The technological infrastructure was pivoted around planning to control the supply chain and manage inventory in a more efficient way.
By setting up an ERP (Enterprise resource planning), the cooperative was able to improve its operational efficiency and bring flexibility in the chain, while strengthening its focus on customers and enhancing the livelihood of grassroot level producers. The 10-year contract, with Amul’s investment of INR 80 crore for such a leap in digital transformation proved to be the trump card for the company during pandemic.
Sharp increase in revenue after accessing tech-backed end-to-end visibility in 2009
Resilience in the Pandemic
As the nation was glued to TV Screens on 24th March, 2021 when the Prime Minister announced the 21-day lockdown, fearing loss in demand, the dairy companies shut down their production units. Amul however saw the opportunity amidst the bleak surrounding. Instead of factory shut downs, Amul doubled its production capacity. Milk was declared to be an essential item and Kirana stores saw throngs gathering around them with increased demand for domestic food items.
While most of the unorganized trade sector and small dairies stopped buying milk from the farmers, Amul increased its share by 15-17%. Even as restaurants, which contribute to 20% of milk demand, were shut down, Amul was quick enough to understand the shift in points of consumption. The sales channel had moved from restaurants to grocery stores and household consumption demand had increased overnight. With families locked inside and work life halted, Amul kept on serving the high-quality products for in-house chefs who unleashed their culinary skills at home. Idle resources were tracked by their robust tech-enabled supply chain that gave the company real-time insights. Thus, even though the demand for ice-creams had seen a dip, Amul utilized this opportunity to divert all resources for ice-cream production towards other product verticals which saw the spike, with the result that all of their factories and production units were operating at 100% capacity.
Realizing the change in consumer behaviour, the company relied heavily on 3rd Party ecommerce sites like Zomato to deliver Amul products to its customers. In May, 2020, Zomato saw 60,000 orders placed for Amul dairy products.
The demand for milk increased by 5-7%, cheese by 30%, butter by 10-20%. Amul witnessed the highest ever sales, amounting to INR 39,248 crore as in-house consumption sore. Sensing an increase in demand for nutritious food, Amul launched new products in the immunity boosting food sector. The opulence for the company was enough for it to stick to its vision of supporting farmers- Amul offered cash incentives for dairy plant workers, sales executives, distributors and retailers, while serving life under lockdown with the Taste of India.
The Amul Girl
The iconic mascot girl, who has been vocal in all occasions, be it social, political or celebration of victory at sports or commending the brave army, did not budge during lockdown. While most companies curtailed their ad-spends, Amul with its unique marketing ideas and strategy, kept investing on marketing. They realized lockdown to be a time for families to watch TV together. The streaming of the epics added a cherry on the cake. Amul too induced the sense of nostalgia by streaming their past advertisements, making the entire life in lockdown an utterly butterly period, tinged with sweet memories amidst the despair around.
Amul - The Marketing Genius
As the pandemic professed of resilience and adaptation being the key skills for survival, Amul preached it by practicing the same. Amidst the gloom of the raging COVID-19, it stood firm by its brand image, delivering the best dairy products to countrymen at affordable prices, with an efficient digitally enabled supply chain bonded by trust among stakeholders.
